The business aviation market has seen little sign of panic selling in the first half of the year as a result of the Covid pandemic, according to the mid-year report by industry data provider JetNet.
While the current inventory of for-sale business jets is now 10.07 percent of the in-service fleet, that level has remained steady since April, with no oversupply as was seen in the aftermath of the global economic meltdown when levels reached nearly 18 percent. Pricing for the used market has softened somewhat, Jetnet noted, but there has been “no wholesale degradation of prices.” Year-over-year (YoY), retail used aircraft sales have declined by 19 percent, but according to brokers and dealers, their phones have been ringing, leading analysts to suggest sellers are not yet entertaining distressed market offers.
“Make no mistake, the market for business aircraft is under stress, and this crisis is not helping,“ said Paul Cardarelli, the Utica, N.Y.-based company’s vice president of sales, “but many of the underlying reasons for this stress were in place prior to the crisis.” Compared with 2018, pre-owned sales had declined last year by 12 percent, while inventory rose by six percent year-over-year. As 2020 dawned, even without the Covid situation, the bizav market faced fallout from the Brexit ratification and the prospect of one of the most bitterly divisive elections in U.S. history.
“So far this year, brokers, dealers, and sellers of business aircraft are showing restraint to not over-react to the negative stimuli that now surround the market," added Cardarelli. "They are taking a short-term position on the crisis, a temporary anomaly that can be waited out.”
JetNet described some changes in what is selling currently as “a bit older, a bit larger, and less expensive than last year.” In the first half of 2019, the average business jet sold was a 2004 model with a price tag of $4.4 million led by the light/super-light category, which had a nearly 30 percent share. In the first half of 2020, the composite aircraft sold is a 2002 model, priced at $3.7 million, with the midsize/super-mid proving most active with 27.25 percent of all jet sales, and an increase of two percent year-over-year.
As a result, the mid/super-mid category has proven to be the most crisis-resilient segment, with inventory holding steady at 10 percent of the installed fleet on the market for the past year. Thus far in 2020, asking prices for the aircraft sold or leased have actually increased YoY, by more than 20 percent to an average of $3.43 million.
In the light-jet segment, retail sales and leases were off by 26 percent, from 349 in the first half of 2019 to 257 in the same period this year, while the asking price for those that changed hands is down by an average of $202,000. Much of that decline in value came in April and May when sales dropped sharply and the aggregated asking price of aircraft sold dipped below $1.4 million. JetNet added that the segment appears to have rebounded in June with 55 sales and leases at an average asking price of $2.65 million.
The large cabin, long-range segment has been hampered by declines in international travel due to Covid quarantines and border restrictions, and that has been reflected in the pre-owned inventory, which has increased by 19 percent this year, from 420 to 500 aircraft on market on a rolling month average YoY, to a total of 8 percent of the installed fleet. Retail sales were off by nearly 21 percent during the first six months of 2020 from 323 to 256, while the loss in value for the composite of large jets sold dropped from $12.4 million to $8.76 million during the same period. JetNet also observed a change in the makeup of those heavy jet sales with the less expensive large jets gaining 5 percent in share while the pricier long-range jets declined by 9 percent in the first half of 2020.
The segment has dominated the business jet industry for more than a decade in terms of deliveries and billings, and the company’s JetNet iQ product remains bullish on it, calling for the segment (including any supersonic business jets) to account for 37 percent of the deliveries and 74 percent of the sales over the next decade.
The largely owner-flown personal jet category, which includes aircraft such as the Embraer Phenom 100, HondaJet, Citation M2, and Cirrus Vision SF50, saw retail sales and leases decline by 25 percent YoY during the first half of 2020. Asking price overall has dropped by little more than five percent or approximately $84,500 to $1.56 million, but for those sold and leased it dropped by 33 percent from nearly $2 million to $1.3 million on a six-month average compared with the previous year, even as the percentage of the in-service inventory has held steady at 12 percent.
On the turboprop side, twin-engine inventory has remained steady at 8 percent of the installed fleet, while there was a 2.3 percent decline in asking price in the first half of 2020. Pre-owned sales were down by 20 percent in the first six months of the year, with those selling having a 4.8 percent decline in price, equating to approximately $62,000 per aircraft.
Single-engine turboprops had a five percent increase in inventory YoY to a level equating to six percent of the fleet. Pre-owned sales are down 27.4 percent for the first six months of 2020 while asking prices dipped by 4.9 percent from the same period in 2019.
